Overview of Canada’s Oil Sands · PDF fileOverview of Canada’s Oil Sands Industry CAPPA Conference 2010 ... Alberta’s Energy Reserves 2009 and Supply/Demand Outlook 2010-2019;

CAPPA Conference 2010 November 2, 2010

Oil Sands Industry Overview 1

Overview of Canada’s Oil Sands Industry

CAPPA Conference 2010

November 2, 2010Calgary, Alberta

12-1

Photo Source: Syncrude Canada Limited

g y,

Bob DunbarStrategy West Inc.

Presentation Outline

Introduction

Industry Overview -yResources & Reserves

Mining & Extraction

In Situ Recovery

Bitumen Upgrading

2

Markets

Challenges

Industry Outlook

Conclusions



Resources and Reserves (ERCB)

Initial volume in place (bitumen): 1,804 billion barrels

Initial established reserves: 176.8 billion barrels

Cumulative production:6.9 billion barrels

Remaining established reserves:established reserves: 169.9 billion barrels

Remaining established reserves under active development: 26.5 billion barrels

3 Oil Sands Areas (OSAs) comprising 15 major Oil Sands Deposits (OSDs)

142,000 square kilometres (54,000 square miles) Data at year-end 2009

Source: ERCB ST98-20010; Alberta’s Energy Reserves 2009 and Supply/Demand Outlook 2010-2019; June 2010

Mineable and In SituResources and Reserves

Mineable Resources/Reserves

< 65m (~215 ft) to top of oil sands

In Situ Resources/Reserves

> 65m (~215 ft) to top of oil sands

Athabasca Oil Sands Area only

7% of initial volume in place

22% of initial established reserves

65% of cumulative production to year-end 2009

Athabasca, Cold Lake and Peace River Oil Sands Areas

93% of initial volume in place

78% of initial established reserves

35% of cumulative production to year-end 2009

Source: ERCB ST98-20010; Alberta’s Energy Reserves 2009 and Supply/Demand Outlook 2010-2019; June 2010



Venezuela

Canada

Saudi Arabia

World’s Largest Oil Reserves

Nigeria

Kazakhstan

Libya

Russia

UAE

Kuwait

Iraq

Iran

Total World Oil

0 50 100 150 200 250 300

Angola

China

Qatar

US

Oil Reserves @ Year‐end 2009 (Billion Barrels)

Source: BP Statistical Review of World Energy; June 2010

Total World Oil Reserves at

December 31, 20091,476 billion barrels

Oil Sands to Synthetic Crude Oil

6

Oil Sands:Deposits of sand,

sandstone or other sedimentary rocks

containing crude bitumen

Synthetic Crude Oil:A mixture of hydrocarbons,

similar to light crude oil, that is derived by

upgrading crude bitumen or heavy oil

Crude Bitumen:A highly viscous

mixture, mainly of hydrocarbons heavier than

pentanes

Illustrations: Syncrude Canada Ltd.



Canadian Oil Production

Alberta’s Oil Sands provided 49% of Canada’s“crude oil” production in 2009 (Canada’s total: 2,873 kb/d)

815

606

147

550

459296 Total SCO and

Bitumen 1,421 kb/d

Synthetic Bitumen W Can C5+

W Can Light W Can Heavy E Can

(all figures thousand b/d)

Source: National Energy Board; July 27, 2010

Surface Mining & Bitumen Extraction

Surface Oil Sands BitumenSurfaceMining

Oil SandsTransport

BitumenExtraction

8



Truck and Shovel Mining

At the Suncor oil sands mine, huge g240 to 380 tonne trucks deliver about 500,000 tonnes of oil sand per day to the ore preparation plants

9

Photo Courtesy Suncor Energy Inc.

plants

Albian Double Roll Crusher

Source: Shell Canada Limited



Albian Conveyors and Storage Silo


Albian Rotary Breaker




Slurry Preparation


Hydrotransport

14

Source: Syncrude Canada Ltd.



Albian Primary Separation Vessels

15

Photo Courtesy Shell Canada Limited

Tailings Disposal

16



Reclamation Cerificates

Reclamation is required to restore the land to an

Gateway Hill Reclaimed Land

the land to an “equivalent land capability”

Reclaimed landscape is to be capable of supporting native vegetation and

Image Source: Canadian Oil Sands Trust.

vegetation and wildlife

Syncrude received the first oil sands reclamation certificate in March 2008

In Situ Recovery

Primary Recovery Secondary Recovery

T ti R Tertiary Recovery• Steam Injection Cyclic Steam Stimulation

(CSS) Steam Assisted Gravity

Drainage (SAGD)• In Situ Combustion Toe-to-Heel Air Injection

(THAI)(THAI)• Solvent Injection VAPEX N-Solv

• Hybrid (Steam/Solvent & Steam/Gas) Processes

• Electric Heating18



In Situ Recovery: Dealing with Viscosity

19

Sources: Enerplus; Syncrude Canada Limited

Cyclic Steam Stimulation (CSS)

Source: Canadian Association of Petroleum Producers



Steam Assisted Gravity Drainage (SAGD)


Upgrading

Approximately 60% of produced bitumen is being “upgraded” to synthetic

d il (SCO) d th

The remaining 40% is being blended with diluents before being hi d t d tcrude oil (SCO) and other

products before being shipped to downstream markets (refineries)

shipped to downstream markets (refineries)

Photo Courtesy Shell Canada Limited

22



Upgrading Overview

Purpose: Mechanisms:

23

Purpose:• Produce higher value

liquid hydrocarbon products

• Produce valuable byproducts

Mechanisms:• Remove or breakdown

bitumen residues

• Remove contaminants

Bitumen-Based Feedstocks to Refined Products

Canadian & USRefineries

Refined Petroleum Products

Mines &In Situ

Projects

Blen

ded

B

itum

en

Blended Bitumen

Refineries

24

GasolineDieselJet FuelFuel OilsLubricantsAsphaltOthers

Synthetic Crude Oil

Upgraders



World’s Largest Oil Consumers

Japan

China

US

Mexico

Canada

South Korea

Brazil

Germany

Saudi Arabia

Russian Federation

India


0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000

Italy

United Kingdom

Iran

France

2009 Oil Consumption (kb/d)

Total 2009 World Oil Consumption

84,077 kb/d

Mexico

Canada

US Crude Oil Imports

Iraq

Angola

Nigeria

Venezuela

Saudi Arabia

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

Colombia

Algeria

Brazil

2009 US Crude Oil Net Imports (kb/d)

Source: US Energy Information Administration

Total 2009 US Crude Oil Net

Imports 9,017 kb/d



Market Demand for Western Canadian Crude Oil

Source: Canadian Association of Petroleum Producers; June 2010

Beyond North America

PuertoLa Cruz

Los Angeles

•

Korea

Kitimat

Japan

Taiwan

••

••

•

•Persian

Gulf

China•

Edmonton•

28

Source: Enbridge

Approx 5, 000 N Miles

Competitive travel distances for Canadian supply to both US and Far East markets



Existing and Proposed Canadian and US Crude Oil Pipelines

Source: CAPP; Crude Oil Forecasts, Markets and Pipelines; June 2010

Oil Sands Industry Sustainability

The “Triple Bottom Line”

HealthyEnvironment

StrongEconomy

Sustainable Development

ProfitPlanet

Social Well-BeingPeople



Bird deaths from oilsands far greater

ENGO Attacks/Industry Image

It is not possible to deal with all of these issues in the time availableoilsands far greater

than estimated

Reliance on Mideast oil funding Afghan

Bitumen ‘ballet’ impresses visiting U.S. senators

Leaders must stand up to counter zealots’ bogus oil sands spin

U.S. lawmaker Pelosi confronts morality of oil

First Nations leaders bring concerns over tar sands impacts to U.S. capital

issues in the time available Two major oil sands industry challenges are

discussed in more detail: GHG Emissions Tailings Disposal

oil funding Afghan war, Pickens says

Oil Sands GHG Emissions

In 2007, Canada’s oil sands industry emitted 38 Mt of GHGs accounting for:g• Less than 5% of Canadian GHG emissions

• Less than 0.1% of global GHG emissions


32



GHG Emissions – Wells to Wheels

Source: Alberta Energy Research Institute/Jacobs Consultancy; July 2009

33

North American Carbon Footprint -Oil Sands and Coal

Source: Oil Sands Developers Group

34



Industry Options to Reduce GHGs

Improve Existing Processes• Reduce energy use• Capture fugitive emissions

Employ New Technologies• Gas-fired cogeneration• Hybrid steam-solvent in situ processes

(i.e., SAP, LASER)In situ combustion processes (i e THAI)• In situ combustion processes (i.e., THAI)

• In situ electric heating (i.e., ET-DSP) • VAPEX, N-Solv

Carbon Capture and Sequestration (CCS) 35

Carbon (CO2) Capture and Storage (CCS)

Capture• At large industrial

sources

Transport• Through pipelines using

existing technology

Storage• In mature oil/gas

reservoirs & deep geologic formations.

• Potential for enhanced oil recovery (EOR)

Safety• Safe and effective over

the long-term; however, public concerns must be addressed

Source: Adapted from ICO2N



Government Investments in Carbon Capture and Storage In 2008, Alberta announced a $2B fund for investment

in Carbon Capture and Storage Four projects were selected for possible provincialFour projects were selected for possible provincial

and federal funding:• Shell/Chevron/Marathon - Quest Project

Integrated carbon capture and storage project at the Scotford Upgrader in the Alberta Industrial Heartland

• Capital Power/Enbridge – Project Pioneer Integrated gasification combined-cycle carbon capture power

generation facility at the Keephills 3 power plant, west of Edmonton

• Enhance/Northwest - The Alberta Carbon Trunk Line Gasification, CO2 capture, transportation, enhanced oil recovery

and storage in the Alberta Industrial Heartland and central Alberta CO2 capture from the Agrium fertilizer plant and the Northwest

upgrader

• Swan Hills Synfuels - in-situ coal gasification (ISCG)

Proposed funding for each project has been announced – final agreements are required

Source: Alberta Energy

37

CO2 Supply Potential

Source: ICO2N; October 2009



CO2 Supply & EOR Demand Potential

Source: ICO2N; October 2009

39

CCS Summary

CCS has potential to reduce the carbon footprint of the oil sands industry

CCS is very costly• Gasification of bitumen residues provides the best

opportunity for CO2 capture in the oil sands

• CO2 capture from new and retrofitted SMRs may also be feasible

• CO2 capture from flue gases is very expensive2 p g y p

EOR requires low-cost CO2

The funding gap must be closed to achieve meaningful capture volumes• Government action would be necessary



ERCB Directive 074

Directive 074: Tailings Performance Criteria and Requirements for Oil Sands Mining Schemes, was

l d F b 3 2009released February 3, 2009

Directive 074 requires operators to: • Prepare tailings plans and report on tailings ponds annually

• Reduce the accumulation of tailings by capturing fine particles, that would otherwise remain suspended in tailings ponds, and placing them in a deposit that is “trafficable”

• Specify dates for construction, use and closure of tailingsSpecify dates for construction, use and closure of tailings ponds and file these dates with the ERCB by September 30, 2009.

Operators’ compliance plans are available on the ERCB website. Supplemental Information Requests will also be available when they are completed.

Source: Alberta Energy Resources Conservation Board

Compliance with Directive 074

ERCB Conditional Approvals• Syncrude Mildred Lake and Aurora North (April 22, 2010)

MFT centrifugation

Commercial demonstration plant to be in operation by August 2011 with start up of a full-scale supplemental tailings plant by June 2015

Untreated MFT to end-pit lakes at end of mine life

• Suncor Fort Hills (April 22, 2010) Thin-lift drying of fluid fine tailings in Dedicated Disposal Areas (DDAs)

Pilot testing required

Zero inventory of Mature Fine Tailings (MFT) at end of mine life

• Suncor Base, Steepbank and Millennium (June 17, 2010) TRO (polymer flocculation and thin-lift drying)

Untreated MFT to end-pit lakes at end of mine life

• Imperial Kearl Lake (August 11, 2010) Commence TSRU tailings treatment and disposal in the in-pit DDA by March 31, 2018

Tailings pond to be decommissioned by 2038

• Athabasca Oil Sands Project Muskeg River (September 20, 2010) Atmospheric Fines Drying (AFD)

Commercial operations to commence by June 30, 2013

Plans submitted by CNRL (Horizon) and AOSP (Jackpine) are still under review



Comparative Oil Sands Supply Outlooks

3,000

3,500

CAPP 2010 06 Growth

CAPP 2010 06 Operating & In Construction

SW 2010 07

1,500

2,000

2,500

Oil Supply (kb/d)

ERCB 2010 06

Sources: CAPP; ERCB; NEB; Strategy West Inc.; July 2010

0

500

1,000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

CAPP Canadian Crude Oil Supply Outlook

4,000

4,500Oil Sands In Situ

Oil Sands Mining

E Canada

WCanada Condensate

1,500

2,000

2,500

3,000

3,500

Oil Supply (kb/d)

W Canada Condensate

W Canada Heavy

W Canada L&M

Source: CAPP; Crude Oil Forecast, Markets & Pipeline Expansions; June 2010

0

500

1,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020



I

US

Saudi Arabia

Russia

World’s Largest Oil Producers

Norway

Venezuela

Kuwait

Iraq

UAE

Mexico

Canada

China

Iran

By 2020?

0 2,000 4,000 6,000 8,000 10,000 12,000

Angola

Algeria

Brazil

Nigeria

Norway

2009 Oil Production (kb/d)

Total World Oil Production in 2009

79,948 kb/d


Conclusions

Canada’s oil sands deposits are among the world’s largest hydrocarbon accumulations.g y

The oil sands industry is well established and making a significant contribution to global oil supply.

The 2008/2009 financial and economic crisis caused project deferrals and cancellations.p j

Industry growth has resumed; however, the growth rate will depend on oil prices and how industry and government address the many challenges the industry faces.



Thank You

Questions?

Please visit t t t f ilwww.strategywest.com for oil

sands project lists and other detailed oil sands industry

information47

Documents

Overview of Canada’s Oil Sands · PDF fileOverview of Canada’s Oil Sands Industry CAPPA Conference 2010 ... Alberta’s Energy Reserves 2009 and Supply/Demand Outlook 2010-2019;